IMF's Lagarde fears 'tit-for-tat' escalation from Trump tariff move

03/08/2018 20:05

WASHINGTON, March 8 (Reuters) - International Monetary Fund
Managing Director Christine Lagarde said on Thursday that she
feared a "tit-for-tat" escalation of trade retaliation over U.S.
President Donald Trump's steel and aluminum tariffs that would
sap business confidence and investment.

Lagarde, speaking at a Washington Post forum on women's
issues, said it was not the direct economic impact from the
tariffs that concerned her most, but its role as a "trigger" for
retaliatory responses from trading partners worldwide.

"It is that escalation that is in and of itself dangerous
for the impact that it has on all those economies, and
furthermore for the impact that it has on confidence," Lagarde
said, noting that trade has been an engine of growth that has
fueled a stronger global recovery in recent months.

"And confidence is a super-precious good that builds over
time and can be destroyed very quickly," Lagarde said. "If the
perception of investors around the world is that this is
uncertain, and you never know where the tariffs are going to go,
how high, how low, against whom ... then you step back and you
don't invest, you wait and that confidence impact could be
significant."

Her comments followed Trump's announcement of 25 percent
U.S. import tariffs on steel and 10 percent on aluminum. The
tariffs are due to start in 15 days and initially exempt Canada
and Mexico.
(Reporting by David Lawder;
Editing by Sandra Maler)